Big it firms seen consolidating
In the construction sector, the story is more mixed. Meanwhile, most E&C firms are trying to interpret mixed messages from the new U. administration regarding its proposed mega-infrastructure spending program. E&C contracting is changing in multiple ways, creating new challenges for management teams.In this environment, E&C companies face three major trends that will affect their prospects in 2017 and beyond. One clear shift is the migration to lump-sum, turnkey (LSTK) contracts — in which E&C firms bear the project and cost risk (lump sum) and guarantee operational readiness (turnkey).By her estimates, there are now about 58 of these huge carriers worldwide that can transport more than 18,000 containers, and the number is expected to double in two years. usually increase inventory during the third quarter, ahead of the year-end holidays, and Lee said freight rates are expected to rise further as the peak season for the container shipping industry kicks off.About half the new vessels will be added by the biggest firms. For retailers, “if container costs go higher, obviously it’s a headwind," said Brian Yarbrough, an analyst at Edward Jones. The five biggest container lines control about 60 percent of the global market, according to data provider Alphaliner.One of the world’s largest shipping firms at the time, Hanjin faced a cash crunch as supply outstripped demand in the industry, weakening pricing power and profits for carriers.The other reason we are convinced market consolidation will rebound is that larger firms that survived the last few years now face pressure from shareholders, analysts, and other stakeholders to continue creating value.In a flat market, consolidation is an appealing solution.
Moller-Maersk, discusses second-quarter earnings, the 2M impairment, his outlook for the fleet, the impact of the cyberattack on earnings and consolidation in the container shipping industry. Moller-Maersk A/S is in the process of buying a German competitor and boasts its own fleet of mega ships, including one that can carry about 180 million i Pads. Shipping rates are climbing, and an index tracking cargo rates on major routes from Asia is about 22 percent higher than it was a year earlier.“Container shipping is now a game only for big boys with deep pockets,” said Corrine Png, chief executive officer at Crucial Perspective, a Singapore-based transportation research firm.Technology is changing the industry in ways that favor big firms.Companies in the engineering and construction (E&C) industry have had few safe havens during the past several years.As a result, some smaller companies may struggle to meet their debt covenants through 2020.This squeeze will force management teams to ask some hard questions about their viability as stand-alone entities.
Yet as large multinational players continue to reduce their cost structure and as municipalities become more comfortable working with them, they compete for these smaller projects.